Greg Migliore: N.Y. investors pay over $2M for Ann Arbor building near campus

A group of New York investors is eying opportunities in Ann Arbor and bought a 9,101-square-foot building on State Street last week for more than $2 million.

Palatine Capital Partners plans to upgrade the site and try to attract new tenants to the structure at 209 S. State, near East Washington on the fringes of the University of Michigan campus.

The group bought the site from local owner Goom Sook Lee, who ran a travel agency there for years. It is Palatine's eighth investment since it was founded in January 2007. Other developments include a student housing project in Boston, retail in Washington and a mixed-use site in Aspen, Colo.

Palatine operated as Modena Holdings LLC for the transaction, and two of the investors attended the University of Michigan. Their familiarity with the area helped attract Palatine to the area.

Lee's business, Regency Travel, is expected to move out of the site, leaving about 3,400 square feet of space. Palatine is looking to try to get a dry goods or food tenant into the site and is considering a local property manager to handle daily operations. A local sub shop could go into the first floor.

"We are hoping to attract a strong user that really does have a unique and special offering to the community," said Alex Hurst, managing partner of Palatine.

Immediate improvements are expected to include power washing the exterior and repainting the trim.

There is a tattoo parlor and an office tenant in the building. All of the leases expire in the next two years. Palatine is willing to have the current tenants stay but is also looking at long-term options for the site.

It might look to attract a large, single tenant, or continue to subdivide the space. It's also possible the structure could be demolished and redeveloped, although Hurst said that is not in the group's immediate plans.

"We are open to any and all possibilities," he said. "The property has a lot of potential."

The deal signals continued interest in properties on or near U-M's campus from investors. Jim Chaconas of McKinley, who brokered the deal along with Jimmy Roumanis, said groups can buy at a reasonable price and look at the deals as long-term investments, even if they don't align perfectly with current market conditions.

"Even if you overpay - time will forgive," Chaconas said.

Lee, who owns several properties in the area, is considering selling off her portfolio, Chaconas said.

She could not be reached for comment. She also owns an apartment complex on Hill Street.